Primary Exploration On Improvement Of Income Tax Law In Our Country

Individual income tax is a main tax category to adjust the social distribution and an important tool to carry out the social policies. The getaway of individual income tax of our country was comparatively late and modified for some times. But at present our individual income tax system is only a transition tax system in the course of reformation and can't meet the requirement of the development of marketable economy. There are a lot of problems in individual income tax law of our country: the unscientific definition of the resident taxpayer, the exposed malpractice in classified income tax system, the illogical structure of tax rate, the absence of the fees deduction and the lagging levy mechanism. This article has set forth the development of individual income tax of our country and analyzed the operational aspect of individual income tax of our country. It has given advice on the improvement of individual income tax of our country through borrowing ideas from the international successful experiences of individual income tax. Part one summary of the generation and developing history of the individual income tax of the world and our country. Individual income tax is a kind of tax to charge on all individual (natural person) obtained income and is an economic leverage to interference the social activities by the government and an important tool to adjust distribution of income. Individual income tax is the most increased tax in the world at present and most countries have begun to collect individual income tax. And now it has become an important tax category in tax system structure in most countries especially in west developed countries. With the broadening international communication and the daily increased flow of the manpower and capitals the internationalization of individual income tax has become more and more evident. Individual income tax system of the developed countries has influenced the other countries to great extent. Even though the degree of the economic development is different and so are the social systems and economic and political systems as well as the policy targets all countries have made great efforts on the identical tax policy and coordinated the tax system and got close to the internationalization. From its generation to the present the individual income tax has experienced a stepwise improvement. It has a history of two hundred years since the Britain created the individual income tax in 1799. The getaway of the individual income tax of our country was comparatively late until the reform of Chinese tax system in 1994. After the publish of the revised individual income tax law the comparatively integrated individual income tax system has set up primarily. Part two the main analysis of the operational aspects of the individual income tax of our country. Even though some reform and improvement of the individual income tax of our country there are still some flaws in practical operation and there exist many maladjusted points to Chinese economic development: 1.The proportion of the individual income tax of our country in taxation is too low. The revenue of the individual income tax has increased fast after 1993 but whether the absolute amount or the proportion is low which has influenced its financial function and its function of adjusting distribution of income. 2.Adjusting distribution of income is not effective. The difference of the resident income of our country is obvious and increasing greatly. Its specific expressions are: the urban and rural resident income difference is broadening; the resident income difference of different regions is broadening; the resident income difference of different employees. The cause leading to the current state of the resident income in our country is complicated, one of the most important factors is that the adjustment of the distribution of income is out of control. The inefficiency of the adjustmentof the individual income tax to the resident income causes that the individual income tax doesn't exert its function of adjustment of distribution of individual income. In China the main body of taxpayers are the salary pay class not the high pay class which means the individual income tax is not "rob the wealthy to aid the needy"but "rob the needy to aid the wealthy". 3.The loss of individual income tax is high. On the conservative statistics the loss rate of individual income tax in our country is above 50 percent. Part three the analysis of the existing problems in individual income tax law of our country. Individual income tax law of our country is generated in the translation period from planned economy to market economy. After the establishment of the market economy it has exposed many problems: 1.The unscientific definition of the resident taxpayers can't meet the international routine which has eliminated many taxpayers from the resident taxpayers. The determination of the status of the taxpayers is related directly to the national taxation sovereignty. The principle of the determination of the status of the taxpayers in other countries is to try put as many persons as possible into resident taxpayers of their own country under the precondition without prejudice to the international tax laws. The standard of the determination of resident status in our country is too loose in time and without clear regulations in the transition of the resident and non-resident. The determination of the taxation obligation is not strict and the direction of the preferential policies is not clear. 2.There are flaws in the categories of the income tax system of our country. Firstly the burden of taxation is unfair which can't reach the original intention of adjustment of distribution of income; secondly the phenomenon of escaping taxation is easy to take place; thirdly the rate of levy is low.3.The rate structure of individual income tax of our country is illogical and the grade of tax rate is various and the boundary rate is too high. 4.The deduction system design of individual income tax cost is to unite the cost deduction and reducing and remitting which hasn't considered all burdens of the taxpayers and the rising prices and regional difference and is a very simplified deduction system. 5.The levy mechanism of individual income tax of our country is laggard. Firstly the inefficiency of the deduction system; secondly without the self actuated application system; thirdly without the information system of individual income. Part four we shall borrow ideas from the international successful reformation experiences about individual income tax and abide to the principle "the efficiency is first and keeping one eye on justice"and improve the individual income tax law of our country. 1.The reformation trend of the international individual income tax. Internationally individual income tax is developed in the basic direction of "broadening the tax base, decreasing the tax rate, reducing the grades, simplifying the tax system"under the frame of integrated income tax to progressive rate system. The basic trend is: firstly developing from classified mode of income tax system to integrated mode; secondly decreasing the tax rate and reducing the grades; thirdly broadening the tax base; fourthly practicing the indexing of taxation. 2.The principles abided by modification of individual income tax. The efficiency and justice are the basic principles of modern tax laws. The establishment and implementation of any tax laws should abide by the principle, which is the basic requirement of tax laws in market economy and the basic value of the tax laws. Therefore when modifying the individual income tax we should give attention the organic combination of the efficiency and justice. In the contradiction of the efficiency and justice the efficiency is the main aspect we pay attention to and we put it in the firstplace. On the basis we keep one eye on the justice. 3.Implementing the income tax mode of integrity of synthesis and classification 4.Improving the determination system of resident's status and deduction system of cost. In improving the determination system of resident's status firstly modifying the determination standard of resident's status; secondly regulating the modifying principles of resident's status; thirdly reforming the preferential rules of foreign individual income tax. In improving the deduction system of cost we regulate the deduction items scientifically and carry out the indexing deduction of cost. 5.Accomplishing the levy mechanism of individual income tax. Firstly improving the deduction system; secondly setting up information system of individual income; thirdly implementing the taxation coding system. If the individual income tax law can run efficiently it should be improved continuously itself and it also needs the support of the matched facilities. The reformation and improvement of individual income tax shall be rough facing how to supervise the total individual income and how to check the actual individual income.